Morning Market Brief
Based on the latest data from S&P Global, US manufacturing activity expanded as a result of the highest gain in new orders since May 2022. Strong new export demand also contributed to the expansion. Despite the increase, overall business activity slipped as growth in the services segment missed expectations. Measures of services activity fell to the lowest level in three months.
- US factory output rose at the quickest rate since April 2023 as indicated by the S&P Global Flash US Manufacturing Purchasing Managers’ Index’s (PMI) increase to 51.5 in February from 50.7 in January.
- The US Manufacturing PMI increased for two consecutive months for the first time in over 12 months. Manufacturing sentiment was subdued for most of 2023, with almost every monthly reading under 50, a level indicating contraction. However, business confidence in the sector has been stronger at the start of 2024.
- Order processing times quickened. The improved functioning of supply chains helped to speed up delivery times, especially as challenging weather conditions from January did not extend into February.
- Input costs of raw materials stabilized. Prices grew at the slowest rate since October 2020, suggesting that pricing pressure was easing. The lower-than-expected prices countered some concerns that price pressures would increase again in February.
Employment growth at manufacturers in the US remained largely unchanged in February compared to the previous month. In Canada, it remains to be seen whether the manufacturing segment will also pick up. According to Statistics Canada, manufacturing sales are expected to decline by 0.7% in January. However, economists expect Canada’s manufacturing PMI to break through the 50 level, indicating expansion, by the end of the first quarter of 2024.
Please contact me to discuss how changes in US or Canadian manufacturing activity might impact your portfolio.